Our markets
New Zealand energy
One of the earliest competitive deregulated energy markets in the world, the New Zealand Electricity Market (NZEM) began in 1996. However, relatively small compared to Australia and with a landscape dominated by 5 large vertically integrated participants, the forward markets have not developed at the same rate that the physical market has. Futures exchange traded contracts only began listing in 2009, and so electricity derivatives investing in New Zealand is very much an emerging market.
Basic characteristics of the New Zealand electricity market:
- Installed capacity approximately 9,000MW
- 93% of generation output from 5 vertically integrated companies
- New Zealand has a very high reliance on hydro generation (approximately 60%) with relatively small hydro catchment areas, making it susceptible to dry inflow years
- New Zealand is a rapidly growing market for renewable energy strongly supported by Government policy
- Futures exchange traded contracts were listed in 2009, and so electricity trading in New Zealand is very much an emerging market
- In contrast to Australia which operates 5 regional spot prices, New Zealand uses different nodal prices to reflect the margin supply cost at each of the 240+ nodes across the transmission network every 5 minutes
- Electricity derivative contracts are listed on a quarterly basis on the Sydney Futures Exchange (SFE). These listed products include futures, caps and options.
The Electricity Commission is a NZ Government owned entity setup to oversee the New Zealand electricity industry and market. They are a good place to start to develop a greater understanding of the New Zealand energy industry.
The ASX can provide further information on the products and specifications of the New Zealand electricity market futures products.